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How to make Australia
energy efficient
The Energy Efficiency Council is the peak body for
companies that provide energy efficiency services
and products to business and government. Together,
Australia’s top efficiency experts have developed a
set of policies that would transform Australia into a Key sectors for action
competitive, low-carbon economy.
Industry
The top 200 companies in Australia use almost twice as
much energy as all households put together. Requiring these
Three big policies to transform companies to improve their efficiency by just one per cent each
year and giving them targeted financial support to help them
Australia meet and exceed this target would save over $2 billion a year
while slashing carbon emissions.
An energy efficiency target for Australia
We could meet all the growth in our energy needs over the next
decade simply by using the energy we waste now. Australia Cogeneration
should follow Europe, China and the US and set a serious A feed-in tariff and changes to the electricity market could create
energy efficiency target. The Council recommends that Australia 3000 Megawatts of low-emission cogeneration – that’s double
cut energy demand by 20 per cent below business-as-usual by the output of Victoria’s aging Hazelwood power station and
2020. around 75 per cent less greenhouse emissions per Megawatt.
page 2
What energy
efficiency delivers
Energy efficiency is Australia’s biggest untapped opportunity.
The steps presented here would transform Australia into a
competitive, innovative, low-emission economy while keeping
energy affordable.
Retain and Create 75,000 jobs
“One of the fastest, easiest and When a company improves its energy efficiency it becomes more
competitive and can invest its savings on expanding production
c h e a p e s t ways to make our and retaining workers. This also creates jobs for workers
economy stronger and cleaner is including builders, plumbers, engineers and manufacturers.
HSBC estimates that the global market for energy efficiency is
t o m a k e our economy mor e already USD$164 billion each year, and it more than doubled
between 2008 and 2009 2. If Australia improves its own
energy efficient.” efficiency it would build an Australian-based domestic and
export industry with 75,000 jobs in energy efficiency by 20303.
US President Barack Obama
3
1
ClimateWorks Australia 2010, A Low Carbon Growth Plan for Australia
(Figures for annual savings are in 2020 unless stated otherwise.) page
2
HSBC 2009, Climate Annual Index Review September 2009
3
ACTU & ACF 2008, Green Gold Rush
4
IEA 2004, Oil Crises and Climate Challenges: 30 Years of Energy Use in IEA
Countries
The Big
Picture
Energy Efficiency - half the greenhouse solution Energy Efficiency - a wise investment
It’s a fact. Energy efficiency is the biggest, cheapest and fastest Efficiency is not only the cheapest way to cut emissions – it
way to cut greenhouse emissions. Energy efficiency could deliver actually saves us money. This means that even in the absence
half of Australia’s abatement between 2000 and 2020. However, of climate change we should take action on energy efficiency
Australia is improving its energy efficiency slowly. If we increased to strengthen our economy. ClimateWorks Australia found that
that rate of improvement, by 2020 we could cut emissions by an energy efficiency could save the economy $5 billion a year.
extra 50 Megatonnes a year. That’s more greenhouse savings
than we’d get from taking every Australian car off the road! This means that Australia will have to pay more to tackle climate
change if we fail to take up the obvious potential of energy
The International Energy Agency estimates that energy efficiency efficiency. For example, energy efficiency in the building sector
will deliver 65 per cent of worldwide carbon cuts in the energy could save $38 billion every year by 2050, partly by avoiding
sector by 2020, and 54 per cent by 2030. This means that in more expensive ways to cut emissions6.
2020 energy efficiency could have almost twice the impact of
renewable energy, nuclear power and clean coal combined. It’s However, energy efficiency is not free. Like any wise investment
a similar story in Australia. The Australian Bureau of Agricultural it requires an outlay upfront to deliver good returns. Once these
and Research Economics estimate that energy efficiency will returns have paid back their original investments the savings go
account for 55 per cent of Australia’s cuts in greenhouse gasses straight to the bottom line.
over the next 40 years5.
Figure 1: The proportion of global abatement from different sources, from IEA World Energy Outlook 2008
45
Gigatonnes of CO2
550 450
Policy Policy
Scenario Scenario
40 9% Nuclear
14%
CCS
35 23%
Renewables
Energy Efficiency
30 54%
25
20
2005 2010 2015 2020 2025 2030
do-nothing 50ppm 450ppm
4
5
Gurney, A., Ford, M., Low, K., Tulloh, C., Jakeman, G. and Gunasekera, D. 2007,
page Technology: Toward a Low Emissions Future, ABARE Research Report 07.16
6
Centre for International Economics 2007, Capitalising on the building sector’s potential
to lessen the costs of a broad based GHG emissions cut. Centre for International
Economics, Sydney.
Energy Efficiency – acting now to prepare for a
carbon price
Even if Australia introduced a price on carbon tomorrow, we
would still need strong energy efficiency policies. The European
Union has had an emissions trading scheme since 2005 and also
has more ambitious energy efficiency policies than Australia. As
there are many barriers to energy efficiency, we need several
key energy efficiency policies. These policies are separate from
a carbon price and are compatible with either Labor’s delayed
Carbon Pollution Reduction Scheme or the Coalition’s proposed
abatement purchasing scheme.
5
7
California Public Utilities Commission and California Energy Commission 2006
Energy Efficiency – California’s Highest Priority Resource page
Overarching Policies
and Energy Market Reform
Energy efficiency is critical to Australia’s future but, like anything
worthwhile, it not simple. It requires investment and well-designed
policies.
page 6
A National Efficiency Scheme
2. Apply to all parts of the economy, but focus on industry and • Establish support services to assist companies to apply
commercial buildings, as these sectors have the greatest for funding.
potential for energy savings.
Schemes like the NES have been operational for many years
3. Be run by an independent body that includes impartial in the US and Europe. Australia already has three state-based
energy efficiency experts. This will ensure a fairer system efficiency schemes: the New South Wales Energy Saving
and give people confidence about the long-term stability of Scheme (ESS), Victorian Energy Efficiency Target (VEET) and
the scheme. South Australian Residential Energy Efficiency Scheme (REES).
Other states are considering their own schemes, too. Introducing
4. Balance simplicity and compliance by providing part of a single, national scheme would be far more efficient and would
the incentive up front and part after measurement and cut compliance costs for retailers and other businesses.
verification.
page 7
Strengthening
Industry
Industry uses a huge amount of energy. Just 220 companies, Mandatory minimum goals to improve energy
mainly in manufacturing, mining, and construction, use more efficiency
than 40 per cent of the energy consumed in Australia. This
means there are enormous opportunities to save energy in Every large company has opportunities to improve their energy
industry. One company recently found that they could save 5.4 efficiency. Requiring the 200 largest energy users to improve their
Petajoules of energy at a single site. That’s enough energy to energy efficiency by just one per cent per annum would ensure
power 100,000 homes. that everyone plays a part in reducing Australia’s emissions. In
countries like the Netherlands, efficiency goals improved the
When a large company tackles energy waste, they cut greenhouse efficiency of industry by over 20 per cent in just ten years.
gasses, save money and become more globally competitive.
Since 1994, Dow Chemicals has cut its global greenhouse gas
emissions by 25 per cent and saved US$9.2 billion through Fair financial support
energy efficiency.
Supporting companies to go beyond minimum targets will deliver
It’s easy to assume that big companies don’t need support to major benefits to the economy. The government shouldn’t fund
become energy efficient because it is an obvious economic efficiency projects with short payback periods because they
benefit. However, many companies lack the expertise, culture already deliver such large benefits to corporations. However,
and systems to reap these savings. Recent research by 200 the government should use the National Efficiency Scheme
corporations found opportunities to cut their energy use by over to support industrial projects that involve R&D or have longer
60 Petajoules, saving $736 million and cutting Australia’s total payback periods. This support should be scaled back over
emissions by over one per cent – a staggering result. time.
page 8
Unleashing cogeneration
Cogenerators are on-site generators, which are typically fuelled An Ombudsman, Standard Connection Rules
either by gas or renewable fuels. Cogeneration is more than and Annual maps
twice as efficient as conventional coal and gas generation,
because it uses the heat that it generates for services like hot The Government should develop standard rules for connecting
water and air conditioning. Cogeneration also saves the energy cogeneration to the grid, including a method for determining
that is normally lost in long-distance transmission, and can the cost of connecting to the grid. This should be enforced by
deliver critical services in stabilising the grid if energy is also an ombudsman and supported by an annual map of the costs
coming from sources like wind and solar. and benefits of connecting cogeneration at different points in
the grid.
However, there are some barriers that prevent us all benefitting
from cogeneration. Connecting cogeneration plants to the grid
can be expensive, arbitrary and drawn out. Companies that own Fair rules for selling and distributing electricity
cogeneration equipment generally don’t get paid for the services
Some of the rules of the electricity market prevent cogenerators
that they deliver in stabilising the grid. Regulations designed for
being able to sell and distribute electricity. These should be
large generators can be inappropriate and burdensome for small
addressed by creating ‘virtual private wire’ rules that allow
generators.
cogenerators to use the grid to move electricity, and allowing
We need dedicated policies to liberate the potential of co- distributors to sell electricity directly to customers.
generation in industry, commercial buildings and communities.
Expanding gas infrastructure
In many areas of Australia the gas infrastructure can’t support
Recommendations for cogeneration cogeneration. The Government should use the Future Fund to
invest in the expansion of the ‘backbone’ gas supply network.
A feed-in tariff
Cogeneration provides many benefits to society, but barriers
to implementing cogeneration mean that governments need to
provide an incentive for the first 3,000 MW of cogeneration that
is established in Australia.
page 9
Transforming
Commercial Buildings
A major retrofit of Australia’s existing commercial buildings over
the next decade could save $1.4 billion a year9, cut building
emissions by 30 per cent, and create 27,000 jobs10. While we National Efficiency Scheme
should make all new buildings efficient, focusing on retrofitting
The National Efficiency Scheme should provide incentives for
existing buildings will have a much bigger impact, as these will
companies that improve the energy efficiency of their buildings.
account for two thirds or more of the building stock in 2030.
The incentive should encourage whole-of-building upgrades
‘Retrofit’ programs need to focus on integrated building and provide greater incentives for more ambitious upgrades.
upgrades. Combining a bundle of measures together, like chiller
replacements and lighting refits, is financially attractive and
delivers deep cuts in emissions. If property owners have to do
Performance Disclosure
these upgrades separately it is harder to finance them. The Australian Government is currently introducing vital
legislation that will require commercial property owners to
Investing in building energy efficiency delivers excellent rates of disclose the energy efficiency of their buildings at the point of
return. Investa recently improved one of its Sydney properties lease and sale. We can strengthen this by requiring governments
to 4.5 NABERS stars, cutting energy use by 51 per cent at and private sector tenants to display efficiency ratings for their
almost 50 per cent rate of return. However, there are barriers tenancies in their foyers.
that impede many companies from retrofitting. Currently, the
benefits are split between landlords, tenants and other parties
in the National Electricity Market, and there are skill gaps and Support for Innovation
problems with financing upgrades.
While we can make major improvements in energy efficiency
using current technologies and practices, developing low and
zero-carbon buildings requires innovation. Governments should
Key recommendations for commercial innovate in their own buildings and provide R&D funding for the
private sector.
buildings
Access to capital Capacity Building
Energy efficiency is like any wise investment - it delivers excellent Retrofitting Australia’s buildings will create a huge number of
returns but it’s not free. This means that companies need to find jobs, but this means up-skilling existing workers and training
suitable finance to invest in energy efficiency. The government new workers.
should trial a number of schemes that provide building owners
with simple access to finance, including revolving funds and
Property-Assessed Clean Energy loans.
10
9
ClimateWorks Australia 2010, A Low Carbon Growth Plan for Australia
page
10
Davis Langdon 2009, Retrogreening Offices in Australia, Davis Langdon Research
Report, Davis Langdon
Making governments
energy efficient
If Australia’s governments become energy efficient this would
be a win-win for taxpayers and the environment. Governments
in Australia collectively waste $450 million in energy every year11. Recommendations for government
If the public sector invested in energy efficiency they could cut
their emissions by 30 per cent while saving taxpayers money. operations
The Auditor General found that the Australian Government alone Commit to a clear funding path for energy
could save $75 million each year if it just met its own modest efficiency
energy efficiency targets12. However, the Government’s financial
procedures for borrowing private capital, seeking funds from the Agencies need access to capital to invest in energy efficiency
budget and retaining savings can make it difficult for agencies to through revolving funds, third party finance or similar.
obtain funds for sensible energy efficiency investments. Governments should generally provide access to capital
equivalent to 25 per cent of their annual gas and electricity bill
Governments in the US and Europe that are successfully each year, and the Federal Government should provide access
improving their energy efficiency either invest in energy to $75 million in finance per annum over the next 5 years. If
efficiency using their own funds or the private sector invests on governments can make clear investment plans over 5 to 10 year
their behalf. This upfront investment is then paid back through timeframes it will allow industry to meet government and private
energy savings, so that budgets remain positive. In just one sector demand.
decade the US public sector invested US$21 billion to improve
the efficiency of schools, hospitals and other buildings.
Mandate agencies to upgrade their efficiency
The State governments in Queensland and Victoria have started
All government agencies should improve their top energy-using
to invest in energy efficiency and are reaping the benefits. For
sites by 2012, accounting for 30 per cent of their energy use,
example, Logan Hospital in Queensland cut its electricity use
and by 2020 cover off on their remaining major sites, to cover
by 19 per cent, with a return on investment of 18.6 per cent. We
80 per cent of agency energy use. Department heads should be
need to expand these programs and we need other governments
accountable for achieving these targets.
to urgently follow their example.
Public Reporting
All agencies must publicly report their progress on an annual
basis, and publicly disclose NABERS energy ratings for all
owned or leased offices over 1000m2.
11
11
ClimateWorks Australia 2010, A Low Carbon Growth Plan for Australia
12
Australian National Audit Office 2009 page
7 Steps to make Australia energy efficient
The Energy Efficiency Council recommends action in seven key policy areas. These measures would save the economy billions of
dollars every year, reduce electricity price rises and are essential if Australia is going to meet its international commitments to reduce
greenhouse emissions by 2020.
Target Cut energy use by 20 per cent below business as usual by 2020
The Grid Targeted investment in efficiency by electricity distributors to reduce expenditure on the grid
The Energy Efficiency Council is based in a 5-star NABERS rated office in Melbourne
This booklet is printed on 100 per cent post consumer recycled paper with vegetable based inks